Five years ago, when the relevant cost index was 135, a nuclear centrifuge cost $32,000. The centrifuge had a capacity of separating 1250 gallons of ionized solution per hour. Today, it is desired to build a centrifuge with capacity of 3500 gallons per hour, but the cost index now is 270. Assuming a power-sizing exponent to reflect economies of scale, x, of 0.72, use the power-sizing model to determine the approximate cost (expressed in today’s dollars) of the new reactor.
Five years ago, when the relevant cost index was 135, a nuclear centrifuge cost $32,000. The centrifuge had a capacity of separating 1250 gallons of ionized solution per hour. Today, it is desired to build a centrifuge with capacity of 3500 gallons per hour, but the cost index now is 270. Assuming a power-sizing exponent to reflect economies of scale, x, of 0.72, use the power-sizing model to determine the approximate cost (expressed in today’s dollars) of the new reactor.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter9: Applications Of Cost Theory
Section: Chapter Questions
Problem 1.6CE
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Five years ago, when the relevant cost index was 135, a nuclear centrifuge cost $32,000. The centrifuge had a capacity of separating 1250 gallons of ionized solution per hour. Today, it is desired to build a centrifuge with capacity of 3500 gallons per hour, but the cost index now is 270. Assuming a power-sizing exponent to reflect economies of scale, x, of 0.72, use the power-sizing model to determine the approximate cost (expressed in today’s dollars) of the new reactor.
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